Why Ad Holding Companies Should Behave More Like Venture Capitalists

Ideas That Get Tossed Aside Could Result in Real, Salable Products

Anyone who's spent time at an ad agency knows that a lot of ideas get left on the cutting-room floor. Sometimes they're inconsequential ideas about a particular media choice or a turn of phrase in a tagline. But sometimes the ideas left behind are big, game-changing concepts -- kernels of something that , if questioned and nurtured and developed, could result in products or services that are real and salable.

We let these ideas wither on the vine or dismiss them summarily because ad agencies aren't responsible for creating business models -- at least not anymore.

Too often, we serve as vendors that create campaigns rather than as consultants or partners who are integral to the business.

Making It Real
Meanwhile, at venture-capital firms and the startups they fund, strategic and creative thinkers are exploring and debating similar ideas, building applications and brands. They're examining a concept's viability, what niche the product or service could fill, what its defining characteristics are, how to differentiate it from the competition and the best ways to communicate that positioning.

Sound familiar? It's the same pressure test that happens at ad agencies as they churn out ideas, but the VCs and startups are making real, live products out of them while the agencies move on to the next campaign.

This practice hurts the advertising community on a number of levels.

The biggest problem is the brain drain -- the loss of human capital that occurs when agency people leave to go to startups or tech firms. They make the jump to be at companies that are more nimble and flexible, places that encourage risk-taking and reward big ideas, and they take with them valuable skills and experience that are essential to an agency's makeup.

Sadly, many people get bored or frustrated and leave for greener pastures, to do the same type of thinking but to see something come of that effort -- to see good ideas become real, meaningful businesses. They're still branding and solving problems, but they're doing it for an app while we're still doing it for craft.

Once Upon a Time
It wasn't always this way. Agencies once played a bigger role at the boardroom table, consulting with top brass about where the business needed to go and how to get it there. Perhaps if agencies had the infrastructure and processes to cultivate ideas, to grow them into reality, to serve as business consultants, we'd regain that seat at the table.

So how do we get there? Who's going to write the checks? After all, big ideas without capital behind them go nowhere fast. The funding may be closer than we think -- closer than VCs or banks.

Agency holding companies function a lot like financial institutions; they provide the infrastructure for multiple companies to operate. Checks are guaranteed, loans are paid, payrolls are met. They know how to create and manage profits. They have leverage in the investment community. And, perhaps most important, they hold a significant creative talent pool that 's currently underused.

So instead of buying up companies, why can't the networks build them? Why can't they invent the technology and services they and their clients need? The ideas are likely already there, in the creative assets and talent pool already in place. Maximize that human capital; create new ways to draw value from it, because its worth is significant.

Don't get me wrong: There are many examples of holding companies starting new agencies. I worked at one. But, as we all know, the majority of the time these shops aren't formed to cultivate the best talent the industry has to offer. They're usually formed to manage client conflict or serve a single client rather than experiment with new models.

A Modest Proposal
So here's what I'm proposing to the big ad holding companies of the world: Help the industry by supporting new agencies launched solely to serve as creators of bold ideas and consultants to pioneering brands.

There's also a lesson for agencies of all sizes. We need to foster an environment where an entrepreneurial spirit is encouraged -- where creative and strategic thinkers have permission to fail and, by extension, to wildly succeed. Let them solve problems from different angles and create new ways of doing business.

Not all of their ideas will be good; in fact, much of what ends up on the cutting-room floor may land there for good reason. But the best ideas could be answers to questions far beyond the scope of a particular project or assignment. They just might lead us to the next product or service that changes everything.

ABOUT THE AUTHOR

Chuck McBride is founder and chief creative officer at Cutwater, which was formerly owned by Omnicom Group and is now independent.